Fundamentals of Marketing

4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page i (PANTONE(Black/Process 201 CVU Black plate) plate) FUNDAMENTALS OF MARKETING Fundamentals of Marketing provides a sound appreciation of the fundamentals of the theory and practice of marketing. It critically evaluates the effectiveness of different marketing strategies and approaches using case studies drawn from a cross section of sectors. Case studies include: I Coke’s distinct image in Trinidad I Role of guanxi in Chinese buying negotiations I Technology development: Apple Mac to iMac and iPod I Brand personality: image of FCUK I Virgin’s use of direct sales in financial services I New product global success of dumpy bottles I Rebranding New Zealand merino wool I Online retail pricing I Changing image of Dyson cleaner I Dyno-Rod franchising I Charity shop achievements I Introducing Stoats Porridge Bars I Internet competition with traditional channels: Amazon.com versus Barnes & Noble Featuring a website to run alongside the text providing student and lecturer resources, this text conveys the main principles of marketing in a challenging yet accessible manner and provides the reader with insights into the workings of marketing today. Marilyn A. Stone is Senior Lecturer and Director of the International Management degree at Heriot-Watt University, Edinburgh. John Desmond is Reader in Management at St Andrews University, Scotland. 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page ii (PANTONE(Black/Process 201 CVU Black plate) plate) 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page iii (PANTONE(Black/Process 201 CVU Black plate) plate) FUNDAMENTALS OF MARKETING Marilyn A. Stone and John Desmond With a contribution by J.B. (Ian) McCall 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page iv (PANTONE(Black/Process 201 CVU Black plate) plate) First published 2007 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2006. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” © 2007 Marilyn A. Stone and John Desmond All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Stone, Marilyn A. Fundamentals of marketing/Marilyn A. Stone and John Desmond. p. cm. Includes bibliographical references and index. 1. Marketing. I. Desmond, John, 1952–. II. Title. HF5415.S872 2006 658.8–dc22 2006015003 ISBN 0-203-03078-8 Master e-book ISBN ISBN10: 0–415–37096–5 (hbk) ISBN10: 0–415–37097–3 (pbk) ISBN10: 0–203–03078–8 (ebk) ISBN13: 978–0–415–37096–7 (hbk) ISBN13: 978–0–415–37097–4 (pbk) ISBN13: 978–0–203–03078–3 (ebk) 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page v (PANTONE(Black/Process 201 CVU Black plate) plate) Marilyn Stone dedicates her contribution of this work to her family, Phil, Juliette and Anthony, and to her parents, Nuala and Robert, in recognition of all the support that they have given to her in pursuit of an appreciation of international marketing. She also wishes to acknowledge gratefully all those at the Western General Hospital, Edinburgh whose efforts enabled the book to be completed. John Desmond dedicates his contribution to his wife, Fiona, to thank her for her patience and encouragement. 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page vi (PANTONE(Black/Process 201 CVU Black plate) plate) 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page vii (PANTONE(Black/Process 201 CVU Black plate) plate) CONTENTS I I I I List of illustrations xi List of tables xiii List of case studies xv Preface xvii Acknowledgements xviii List of abbreviations xix Introduction xxiii 1 Marketing: development and scope of the subject 1 Introduction 2 The study of marketing 2 A managerial approach 3 Developments in marketing theory 8 Conclusion 18 2 Strategic marketing and the planning process 20 Introduction 21 The marketing environment 21 Conclusion 41 3 Consumer buyer behaviour 43 Introduction 44 Economic theory 44 Freud and psychoanalysis 46 Freud’s legacy: changing social characters 53 Gender identity 57 Behaviourism 61 Cognitive Information Processing 76 Consumer involvement 87 The behaviourist explanation of involvement 94 Conclusion 96 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page viii (PANTONE(Black/Process 201 CVU Black plate) plate) CONTENTS I I I I 4 Industrial buyer behaviour 98 Introduction 99 Types of organizational markets 99 The organizational buying centre 101 The B-to-B buying process 102 Comparison between B-to-B and consumer buyer behaviour 106 New approaches to B-to-B buying behaviour 107 Strategic use of technology in buying: intranets and extranets 108 Conclusion 113 5 Marketing research 114 Introduction 115 The structure of the marketing research industry 120 The marketing research process 125 Marketing research methodology 125 Sampling methods 142 Questionnaire design 147 Attitude, beliefs and behaviour 147 Definition of the marketing mix 156 Marketing research industry controls 166 Conclusion 169 6 Segmentation, targeting and positioning 172 Introduction 173 Market segmentation 174 Selecting target markets 190 Positioning 195 Conclusion 200 7 Branding 201 Introduction 202 Brief modern history of branding 202 Brand decisions 205 Mainstream explanation of branding 206 Behaviourist view 219 Brand loyalty 221 Conclusion 224 8 Product 225 Introduction 226 Characteristics of the product life cycle and their marketing implications 229 I I I viii 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page ix (PANTONE(Black/Process 201 CVU Black plate) plate) I I I I CONTENTS Facets of the PLC 236 New product development (NPD) 239 The market diffusion process 258 Organizing for new product development 259 Conclusion 263 9 Pricing 265 Introduction 266 Price and the marketing mix 267 Pricing objectives 268 Factors affecting pricing decisions 269 Setting a price 271 Pricing industrial goods 279 Pricing and information technology 281 Conclusion 289 10 Promotion 290 Introduction 291 Relations between corporate and marketing communications 291 The communications process 291 The marketing communications process 302 Planning marketing communications campaigns 308 Communications contact techniques 322 IT influence on advertising media 332 Conclusion 335 11 Place: channels of distribution 337 Introduction 338 Channel constraints 338 The structure of channels of distribution 344 Intermediaries within channels of distribution 348 Types of retail franchise agreements 349 Developments in retailing 352 Development in information technology 359 International expansion of the retail industry 364 Conclusion 366 12 Virtual marketing 369 Introduction 370 The Internet 370 The World Wide Web 371 Consumer behaviour on the Web 374 ix I I I 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page x (PANTONE(Black/Process 201 CVU Black plate) plate) CONTENTS I I I I Marketing and the Internet 378 Other issues relating to promotion 388 Conclusion 392 13 Marketing planning and implementation 394 Introduction 395 Setting out the mission, aims and objectives 399 Conclusion 415 Notes 417 Answers to review questions 419 References 446 Index 460 I I I x 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page xi (PANTONE(Black/Process 201 CVU Black plate) plate) ILLUSTRATIONS I I I I 1 The structure of the book xxiv 2.1 The firm (organism) in relation to its environment 21 2.2 Trends in urbanization 25 2.3 Population aged 65+ 25 2.4 Gross domestic product per capita 30 2.5 Carbon emissions per capita 31 2.6 The marketing planning process 32 2.7 SWOT: creating a fit between organization and environment 33 3.1 Relations between key terms in later Freudian theory 51 3.2 Summary of classical, operant and cognitive learning processes 62 3.3 Example of ‘reason why’ copy 64 3.4 Example of anxiety appeal 66 3.5 Foxall’s behavioural perspective model 72 3.6 Contingencies of consumer choice 74 3.7 Simplified cognitive information system 79 3.8 The theory of reasoned action 83 3.9 Cognitive model of the consumer buyer decision process 84 3.10 The relationship between involvement and complexity 91 3.11 The purchase decision process: high involvement 92 3.12 Decision making for brand-loyal customers 92 4.1 The decision process for choice of supplier 102 5.1 Marketing information system 116 5.2 The marketing research process 126 5.3 Decomposition of Joe’s hierarchy of beliefs about the Seychelles 150 5.4 Decomposition of Joe’s hierarchy of beliefs, indicating strength of belief 151 6.1 The VALS segmentation system 182 6.2 Process of target market selection 194 6.3 Target market selection 194 6.4 Perceptual map of financial services 196 7.1 Differences in brand personality 207 7.2 Referent system for perfume products 213 7.3 Brand from drawer of meaning to brand as signifier of meaning 215 7.4 Marketing and the brand community 217 8.1 The Product mix, Procter & Gamble 228 xi I I I 4683 FUND MARKET-PT/bp 30/11/06 9:23 am Page xii (PANTONE(Black/Process 201 CVU Black plate) plate) ILLUSTRATIONS I I I I 8.2 The product life cycle model 230 8.3 The

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